State of the Unions 2015
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Building the Team Game State of the Unions – Deloitte Sports Review August 2015 A financial review of the country’s leading rugby unions reveals they have set a solid foundation over the past few years and are ready to step up to the next level. Significant investment in the all-important grass roots game provides a solid foundation for a sustainable future. The continued improvement of rugby union financial viability bodes well for the future of the nation’s favourite game. Contents 1 Executive summary 2 Financial highlights 4 Financial performance 10 Financial position 12 Heartland Rugby Unions & New Zealand Rugby 14 Supporter engagement 16 Developing the game plan… 18 Consolidated financial information 22 About this publication Glossary $000 Thousands (New Zealand Dollars) $m Million D&A Depreciation and amortisation FY Financial year NZR New Zealand Rugby Union Inc. (trading as New Zealand Rugby) Super Investec Super Rugby Rugby Executive summary Welcome to the 4th edition of the Deloitte Sports Review, a review of the 14 semi- professional and amateur rugby unions competing in New Zealand’s premier provincial rugby competition: the ITM Cup. Deloitte’s review of the annual financial accounts The ITM Cup unions generated combined revenues of of the 14 ITM Cup rugby unions shows they have around $67.8 million in FY14, a decrease of $1.4 million continued to build on improved performances over (2.0%) on the previous year but up $0.8 million (1.3%) the past few years. The overall performance of the on two years ago. Total operating costs have remained unions in FY14, while not as impressive as the previous steady over the past three years moving between $65.8 year, was a sound achievement generating the second million in FY12 and $66.0 million in FY14. largest collective surplus recorded. The excellent result The positive trend of financial results demonstrates was achieved on the back of keeping tight control on that the unions have settled into a pattern of expenditure and despite a slight drop in revenue. controlling their expenses to achieve surpluses. A It is a positive feature of the unions’ financial number of the unions are now in a strong financial management that they have been able to keep position to be able to leverage off their assets for operating costs at a manageable level while continuing further investment in the game. to provide community level grass roots rugby with As prudent financial management of the unions financial support. Collectively, the unions have invested continues to improve their financial standing, a number over $19.0 million in FY14, and a total of $103.5 of unions are now in a position to take advantage of million in the last five years, in improving facilities and the capital bases they have accumulated. By leveraging the development of the game at the grassroots level. their cash, investments and other assets, the unions now Keeping the health of the game at the grass roots level have an opportunity to explore initiatives to grow and in good condition is fundamental to retaining support diversify their revenue streams that may have previously and growing the viability of the unions. proved difficult to fund. The fourth Deloitte Sports Review analyses the country’s In addition, rugby administrators must continue to top provincial rugby unions and it is pleasing to see recognise that local community support is vital to their that for a third consecutive year there has been a own well-being and that strategic investment in the collective surplus achieved by all 14 unions. The results grass roots game is essential to grow the game in good for FY14 show a collective surplus of $1.2 million. health. After all, when the final whistle blows, it is all This result follows a $3.2 million surplus in FY13, and about groups of kids and friends throwing the ball a $0.5 million surplus in FY12, and is an astonishing around the park. Ultimately, the unions exist to provide turnaround after the run of five successive years of the right environment for that to occur. losses from FY07 to FY11. This is the first time that we have also included an analysis of the 12 Heartland Championship unions to provide a complete picture of the financial performance of all the provincial unions in New Zealand. Overall the unions have performed as expected of small not-for-profit organisations – they have been living within their means. State of the Unions Deloitte Sports Review 1 Financial Highlights The highlights of the consolidated financial performance and Financial Performance position of the unions in the ITM Cup are set out below. A summary 15.2% 14 % of consolidated financial 68.7% 16.1 results for the last five 12 13 m years and individual 0.2 increase union accounts for the last two years are set out at the back of this Overall surplus for FY14 The breakdown of revenue Income from grants & Total operating publication. stands at $1.2 million, the from FY14 includes sponsorships continues expenditure for FY14 third consecutive collective 68.7% from grants & to be heavily reliant on was slightly up from the surplus achieved by the sponsorships, 15.2% from contributions from previous year, increasing unions. This is down $2.0 match related income New Zealand Rugby marginally by $0.2 million million on FY13 when the and 16.1% from other (NZR) and grants from (0.3%) to $66.0 million. combined unions recorded revenue sources such as non-casino gaming trusts. However, operating a $3.2 million surplus, but administration fees. expenditure remains is an upwards swing of down from five years ago, $3.4 million since the last dropping a total of $11.4 deficit recorded in FY10. million (14.7%) since FY10 and demonstrating 0.6 m substantially improved TOTAL operations over this period. 67.8 m The five provincial Combined match related unions with Super Rugby 28.9% income decreased by $0.6 franchises based in their 24.0% 41.1% million (5.5%) from FY13 home cities generated The combined total to $10.3 million, while 48.3% of the total revenue revenue achieved by the revenue from grants & for all unions in FY14, a unions was $67.8 million sponsorships increased drop from previous years for FY14, a decrease of by $0.4 million (0.9%) as the other unions begin The breakdown of total $1.4 million (2.0%) from to $46.7 million. Over to grow their revenue. operating expenses in FY13. Combined total the past five years, both FY14 includes 47.1% for revenue has dropped $8.8 match related income match related expenditure, million (11.5%) in the past and income from grants 28.9% for growing the five years since FY10. & sponsorships have 2 .1 m game expenditure and decreased - down 31.1% increase 24.0% for administrative and 8.8% respectively. expenses. From FY13 to FY14, administrative expenses increased by $2.1 million and funds invested in growing the community game have decreased by 11 unions achieved 9.1%. a surplus in FY14, up from 5 in FY10 Collectively the unions ITM Cup Unions – Total Revenue achieved a surplus of $1.2 million in FY14 80 60 Second year that the $m 40 “other” unions grew their revenue 20 - FY10 FY11 FY12 FY13 FY14 Financial Position Revenue: Match Related Revenue: Sponsorship & Grants Revenue: Other Unions with Super Rugby Franchises solidified working ITM Cup Unions – Operating Costs FY13 v FY14 capital positions 24% 21% 47% Short-term and long-term The unions have 47% borrowings have continued to solidify continued to decease their working capital as unions pay down positions with the net Outer Ring = FY14 Inner Ring = FY13 their debt obligations. working capital for all 32% Debt was reduced by unions being $7.3 million Team and Match Related Costs 29% $0.7 million (22.0%) in FY14, an improvement Growing The Game from FY13 to FY14, and of 16.2% from FY13. On Administration is down $1.8 million a working capital ratio (41.5%) over the past five basis the unions have years since FY10. improved from a ratio of 1.45 in FY13 to 1.52 ITM Cup Unions – Consolidated Results in FY14. This is also a significant improvement 4 from five years ago when m 2 1. 2 the unions were only for FY14 achieving a 1.06 ratio of . current assets to current $m liabilities. (2) Overall equity/ accumulated funds have (4) increased by $1.2 million FY10 FY11 FY12 FY13 FY14 since the last financial year. Only one union remains in a negative ITM Cup Unions – Consolidated Accumulated Reserves equity position compared In the last five years, the to four unions five years 40 ago in FY10. unions have collectively invested $103.5 million on improving facilities and the 30 development of the game at the grassroots level 20 $m 10 - FY10 FY11 FY12 FY13 FY14 Consolidated Accumulated Funds Net Working Capital State of the Unions Deloitte Sports Review 3 Financial Performance ITM Cup Unions – Revenue Bridge ITM Cup Unions – Total Revenue FY13 v FY14 90 (8.2) 80 16% (1.5) 2.1 (1.4) 70 60 17% 15% 50 $m 40 16% 30 20 10 - FY10 FY11 FY12 FY13 FY14 Total Revenue Negative Movement Positive Movement 67% 69% Over the past few years the unions have settled Revenue has been analysed in three categories: Outer Ring = FY14 into a pattern of controlling expenditure and match day income, grants & sponsorships and Inner Ring = FY13 living within their means. other revenue. Revenue: Match Related Collectively, the New Zealand provincial unions In past years the largest contributor to the unions’ Revenue: Sponsorship & Grants participating in the top tier national competition revenue has been grants & sponsorships.